A Guide to Secured Loans for Homeowners

Homeowner loans explained

For many, being a homeowner brings many perks. One such perk is being able to borrow against a secure asset and borrowing against your home to pay debts or to build an extension on your home can be seen as a necessity in some circumstances. Secured loans are commonly used, and if you plan to get one, it’s always best to be informed before you go for it.

What is a secured loan?

There are a great range of loans out there, but these are specific for those who own their own homes. The catch is that you use your house as collateral against the loan, so if for whatever reason you do not make the repayments, you could be risking your home. This is a loan where the lender has the power to sell your home from underneath you, so while it’s a lifeline, it’s a risky one to hook onto. The lender is the person in the deal that gains the security here, as they have secured your home for themselves if the loan is not repaid.

That’s not to say that homeowner secured loans are entirely negative. They have very many benefits and they can be everything that you need when you have to borrow further. Most regular loans on the market are unsecured, that’s to say – not secure on your home. For a lot of homeowners, a secured loan is a last resort because of the risk.

Why would anyone need a secured loan?

Homeowners don’t practice risk unless it’s necessary, so you can be very sure that no one takes a secured loan without good reason. This is where the ‘pros’ of a secured loan comes into the equation. Here are some of the reasons why people would choose to take a secured loan on their home:

  • Easier to get. Not necessarily easy for every type of borrower, but easier to obtain than an unsecured loan. When your credit is less than desirable and you’re using large collateral like a house, your poor credit may not be a factor to a secured loan lender. After all, why worry about poor credit when that could get them your home? The key is to know that you can make the payments and you have a back up plan to cover you if you have a stretched month.
  • Big borrowing. A secured loan often means larger parameters. Instead of up to £25,000, you could borrow up to £250,000 instead on some loans if you have enough equity and can meet the repayments. This can make a huge difference to your project if you want to make home improvements for example.
  • Longer terms. Most secured loan lenders like longer repayment terms, so you can borrow with a potential of a 25 – 30 year repayment period rather than the standard 1-7 with unsecured loans.
  • Paying debt. When you have too many repayments elsewhere to make, a larger secured debt consolidation loan can be the answer to your issues. You can pay off your debt and have one monthly repayment instead, which can be far more manageable.

How do I find the best deal?

Trying to find the best deal on your secured loan may not be all that easy, but there are some excellent ways that you can ensure that you get a loan that is cost-effective.

Firstly, it’s a good idea to go to a specialist secured loan broker who understand the market place and cam quickly compare the lenders to find a deal that matched your needs. Brokers can offer soft search options, too, which means you can get a rough idea of whether you could be accepted for a secured loan before you go through the application.


In conclusion, a secured loan can be everything that you need to get you out of a debt problem or to carry out improvements around the home. However, it’s something that should be considered very carefully by any homeowner. The worst case scenario if you do not make repayments on time is that you could lose your home. Thankfully, most lenders do not find this to be the most profitable option, so you can negotiate payment terms if you miss a payment. Avoid making this a regular practise and you will be able to make manageable repayments on your secured loan.